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India Latest News: India’s Q3 manufacturing outlook improves, cost of doing business remains cause for concern: FICCI

The outlook for India‘s manufacturing sector appears to have improved within the October-December 2021 quarter even because the cost of doing business remains a cause for concern and hiring prospects stay subdued, in line with a FICCI survey. The findings of the newest quarterly survey on manufacturing unveiled on Sunday additionally replicate sustained financial exercise within the sector, with current common capability utilisation within the vary of 65 to 70 per cent.

It additionally highlighted that producers are wanting ahead to the upcoming Union Budget to reinforce development and investments within the sector. The Budget shall be introduced on February 1.

The proportion of respondents reporting larger manufacturing within the third quarter of 2021-22 (October-December 2021-22) was round 63 per cent, nearly double than the year-round interval (round 33 per cent), famous FICCI.

This evaluation can also be reflective so as books as 61 per cent of the respondents in October-December 2021-22 had a better quantity of orders as in opposition to July-September 2021-22, the survey discovered.

High uncooked materials costs, excessive cost of finance, the uncertainty of demand, scarcity of working capital, excessive logistics cost, low home and world demand attributable to provide chain disruptions are some of the foremost constraints which might be affecting the growth plans of the respondents, it stated.

The survey assessed the efficiency and sentiments of producers for Q3 (October-December 2021-22) for 12 main sectors particularly automotive, capital items, cement, chemical compounds, fertilisers and prescription drugs, electronics & electricals, medical units, steel & steel merchandise, paper merchandise, textiles, textiles equipment and miscellaneous.

Responses have been drawn from over 300 manufacturing items from each massive and SME (small and medium enterprise) segments with a mixed annual turnover of over Rs 2.7 lakh crore.

Around half of the individuals count on an increase of their exports for Q3 2021-22 as in opposition to the identical quarter of the earlier yr.

“Hiring outlook for the manufacturing sector remains subdued as around 75 per cent of the respondents mentioned that they are not likely to hire additional workforce in the next three months,” FICCI acknowledged on the survey.

However, a median rate of interest paid by the producers has diminished barely to eight.4 per cent every year as in opposition to 8.7 per cent throughout final quarter and the very best fee remains as excessive as 15 per cent. It highlights that cuts in repo fee in the previous few months by RBI haven’t led to a proportional discount within the lending fee as reported by round 60 per cent of the respondents.

High uncooked materials costs, elevated transportation and logistics cost, and rise within the costs of diesel, LPG, pure gasoline, energy, and gasoline has been the principle contributor to the growing cost of manufacturing.

Other components affecting the cost of manufacturing are growing labour cost, quick provide of uncooked materials, excessive cost of carrying stock, and fluctuation within the international change fee, confirmed the survey.

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